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Global green energy deal a lifeline for Eskom and its huge debt problem

29 September 2021 9:01 PM
Tags:
Eskom
Climate change
The Money Show
Renewable energy
Bruce Whitfield
Green energy
eskom debt
coal emissions
COP26
coal power
Paris Agreement
Meridian paper
Meridian Economics
Emily Tyler
green energy plan
coal retirement plan

Bruce Whitfield talks to Meridian Economics' Emily Tyler about the climate deal that could save South Africa billions.

Some of the world's richest countries are considering pouring billions into helping South Africa end its dependence on coal.

Climate envoys from the UK, US and Europe are in South Africa to discuss the proposed deal.

© davizro/123rf.com

What exactly is the delegation trying to achieve in its talks with government?

Bruce Whitfield talks to Emily Tyler, Economics Climate Change Lead at Meridian Economics.

The Cape Town-based think tank has released a plan titled The Just Transition Transaction to finance the accelerated retirement of Eskom’s coal power plants.

The delegation is looking at financial mechanisms to enhance the acceleration away from coal, and this is something that has to happen globally after the Paris Agreement and the net zero targets suggested by the report on achieving 1.5 degrees... the safe range for the globe to be in...

Emily Tyler, Economics Climate Change Lead - Meridian Economics

We've realised that we can't run our global coal fleet to the end of its economic life, so part of the solution to getting these coal plants to retire early is to look at how to make this financially viable for the various stakeholders involved.

Emily Tyler, Economics Climate Change Lead - Meridian Economics

She says the proposed assistance for South Africa has been structured as a concessional loan which includes a grant element.

It contains an option whereby South Africa can choose to repay its loan interest by carbon mitigation, so if it hits milestones of decarbonisation agreed to in the loan structure then it can choose to have the interest payments waived commensurate to those tons of carbon dioxide that have been removed.

Emily Tyler, Economics Climate Change Lead - Meridian Economics

Tyler notes that the globe is aiming for 2050 as the date to achieve net zero carbon emissions.

RELATED: Sasol will spend up to R25bn to meet new emissions reduction target by 2030

You can't just turn off the coal plant tomorrow and it takes time to build up the renewables infrastructure that we need in order to service our energy demand, so this phase-down would happen over 20 to 25 years.

Emily Tyler, Economics Climate Change Lead - Meridian Economics

The International Energy Agency (IEA) has said that in emerging economies we need to have all unabated coal off the system by 2040, and that gives you one point in a Paris-aligned trajectory.

Emily Tyler, Economics Climate Change Lead - Meridian Economics

This is why it works well for South Africa with a long-term loan structure she says, because the mitigation performance can be aligned with the payments on a 20-25 year loan.

The problem that this proposal is particularly aiming to solve... with a sovereign-to-sovereign loan... is to give the South African government the fiscal space to deal with Eskom's debt.

Emily Tyler, Economics Climate Change Lead - Meridian Economics

Listen to this important conversation on The Money Show:


This article first appeared on CapeTalk : Global green energy deal a lifeline for Eskom and its huge debt problem




29 September 2021 9:01 PM
Tags:
Eskom
Climate change
The Money Show
Renewable energy
Bruce Whitfield
Green energy
eskom debt
coal emissions
COP26
coal power
Paris Agreement
Meridian paper
Meridian Economics
Emily Tyler
green energy plan
coal retirement plan

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